CONTROLS OVER THE CONTRACTING
OFFICER’S TECHNICAL REPRESENTATIVES WORKFORCE WERE INEFFECTIVE, RESULTING IN
SIGNIFICANT RISKS TO THE GOVERNMENT

Issued on September 30,
2009

Highlights

Highlights of Report Number: 2009-10-139 to the Internal Revenue Service Deputy Commissioners
for Operations Support and Services and Enforcement.

IMPACT ON TAXPAYERS

The
Contracting Officer’s Technical Representatives (COTR) workforce is a key
internal control to ensure that the contractor is meeting the Government’s
interest in terms of providing deliverables that are of high quality, complete,
timely, and cost effective.However, TIGTA
determined that the Internal Revenue Service’s (IRS) contract administration
was ineffective.As a result, the IRS
cannot ensure that payments were made only to contractors who performed in
accordance with contract terms and conditions and that taxpayer dollars are not
being misspent.

WHY TIGTA DID THE AUDIT

This
audit was conducted to determine whether the IRS COTRs are properly managed and functioning
in a manner, as directed by the responsible Contracting Officers (CO) and
applicable guidance, which will ensure goods and services are received in
accordance with the terms of the contracts and within the cost and/or schedule
requirements.

WHAT TIGTA FOUND

The
IRS needs to take steps to strengthen its strategic management of the COTR
workforce.Overall, theIRS’ contract
administration was ineffective to ensure that the Federal Government was receiving the appropriate goods
and services.

The majority of the formally delegated COTRs were not performing the day-to-day contract
oversight or the actual physical receipt and acceptance of contract deliverables
for the procurements to which they were assigned.Instead, these COTRs limited their
involvement to administrative functionsand relied on program office employees to
determine whether the goods or services provided by the contractor were
acceptable.However, these
program office employees were never formally delegated COTR authority by the
responsible CO and had not received training to perform their contract
administration role.When unauthorized
personnel inspect deliverables, make recommendations regarding contract
payments, or instruct the vendor to perform work outside the scope of the
contract, there is a risk that unauthorized commitments can occur or work may not
be completed in accordance with requirements.

Also, IRS managers responsible
for supervising COTRs are not periodically monitoring and/or reviewing the COTR
contract files for
accuracy and completeness.TIGTA found that 22 of 26 COTRs assigned
to 40 contracts with $31.8 million in labor hour expenses did not have
sufficient documentation to support their approval of the contractor’s billed
labor charge.Finally, the IRS needs to
improve the performance assessment process for the COTRs and ensure that they
are held accountable for their contract management duties.

WHAT TIGTA RECOMMENDED

TIGTA recommended the Deputy Commissioners for Operations
Support and for Services and Enforcement identify all IRS employees performing
COTR-related duties and ensure that they are formally delegated authority by
the responsible CO, appropriately trained, and certified in accordance with
Federal acquisition requirements; ensure supervisors are knowledgeable of the contract
oversight requirements and evaluate all aspects of their employees’ COTR responsibilities;
and ensure that consistent ongoing on-the-job support is provided for newly hired/less
experienced COTRs.The Director, Office
of Procurement, should reevaluate the current approach to expand the reviews of
COTR contract files to ensure that reviews are routinely performed, accurate,
and that complete documentation is received, verified, and retained to support
the contractor’s billed expenses.

In their
response to this report, IRS management agreed with four of the five
recommendations and agreed in part with one recommendation.IRS officials agreed guidance is needed to
ensure they provide appropriate contract monitoring to reduce acquisition risk,
and an increase in communication and training are needed for all COTRs.The IRS did not agree to revise the yearly
performance evaluation process because of contractual issues in the collective
bargaining agreement.TIGTA recognizes
the legitimate concerns the IRS has raised with regard to evaluating the
performance of the COTRs; however, despite these concerns, the IRS could
attempt to negotiate different terms in the next collective bargaining
agreement in an effort to address TIGTA’s concerns.

READ THE FULL REPORT

To view the report,
including the scope, methodology, and full IRS response, go to: